J.P Morgan Reinstates Estimates On DineEquity

J.P. Morgan is reinstating estimates and a price target on DineEquity (NYSE: DIN). JPM has a Neutral rating on DIN and a $54 PT.

Following a full review of the DIN model JPM is reinstating its estimates and price target, which now incorporate the $1.7B debt refinancing, refranchising transactions and pre-announced 3Q10 sales results. While better sales trends at Applebee's, the term out of debt, and a peer-low P/E multiple of 11.6x should provide near-term support for the stock, it remains Neutral as shares trade at a relatively high 9.3x EV/EBITDA and improving fundamentals appear fully reflected following the 80% run-up since July 1st vs. the 14% increase in the S&P 500.

For the first 11 weeks of 3Q Applebee's system comps were up 2.7%, positive for the first time since 1Q08. In
addition to easy comparisons, promotional activity benefited Applebee's as comps were enhanced by advertising around the Sizzling Skillets entrees starting at a consumer-friendly $8.99 price point.

DIN is trading lower at $50.24